The sun sets behind the cooling towers of the Hendrina Power Station in Mpumalanga. Photo: REUTERS

JOHANNESBURG - Tegeta Exploration and Resources has remained mum about its impasse with Eskom over the coal supply contract to Eskom’s Hendrina power station in Mpumalanga. 

There is a looming legal showdown between the two companies after Eskom last week confirmed reports that Tegeta, a company owned by the Gupta family, was in breach of its coal supply contract. 

Eskom has alleged that Tegeta wanted to hike the coal price from its Optimum coal mine from the current R150 per ton to an undisclosed amount. 

Tegeta yesterday (MON) failed to respond to respond to the allegations. 

These included Eskom’s claims that the company has not been delivering the agreed quantities of coal to 2 000MW Hendrina, leading to a decline in the power station’s coal stockpiles. 

According to Eskom spokesman Khulu Phasiwe, Tegeta has also threatened to suspend coal supply to Hendrina. 

But since the reports emerged last week, Tegeta has maintained a stony silence. 

The company and its attorney Gert van der Merwe yesterday (MON) did not respond to emails and telephone calls. 

Eskom has vowed to hold Tegeta to the contract and threatened legal action to force it to deliver coal at the agreed quality and quantity.  

Hendrina alleged conduct has ignited a coal supply crisis, prompting Eskom to get tough with Tegeta while considering replacement coal supply contracts for the power station.

Phasiwe on Friday said the power utility was transporting coal from existing Eskom contracted sources to Hendrina. 

Eskom has also gone out of its way to give assurances that the coal supply problems at Hendrina would not trigger loadshedding. “Despite the challenges being experienced at Hendrina, Eskom will ensure that the power system will not be compromised,” said Phasiwe.

The impasse regarding coal supply from Optimum Mine puts to a test the relationship between Eskom and Tegeta in light of allegations that the power utility had in the past bended backwards to accommodate Tegeta. 

Tegeta bought Optimum for R2.15 billion in 2015, after Optimum Coal’s previous owners, global natural resources group Glencore put the asset into bankruptcy protection in August 2015 after Eskom refused to amend what Glencore said was an unprofitable coal-supply contract. 

Optimum is contracted to supply 5.5 million tons per annum to Eskom following an agreement signed in January 1993. 

Tegata snapped Optimum Coal despite former owners Glencore insisted that the coal price was not enough to support mining activities. 

Glencore placed Optimum Coal into business rescue in August 2015 after Eskom refused to renegotiate the price of the long-term supply contract. By that time, Eskom had slapped Glencore with a R2.1 billion penalty for poor coal.

Tegeta’s purchase of Optimum Coal was shrouded in controversy amid allegations that Eskom was giving Tegeta preferential treatment. Eskom gave Tegeta R587m  in the form of a “prepayment” for coal after Tegeta failed to secure a loan of R600m from the banks for the Optimum Coal deal. 

Reports surfaced earlier this year that Eskom had accepted a reduced fine of R500 000 following an arbitration process. Eskom had previously said that it expected Tegeta to pay the entire fine.

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